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10 ways to drive a low carbon future: New Climate Economy report

LONDON: Achieving a clean, prosperous future is within reach – but we must invest at least US$1 trillion a year in clean energy, raise energy efficiency standards and implement effective carbon pricing.

“This report puts credible economic analysis behind what leading sub-national governments already know - that there is a strong economic case for low carbon development, especially in sectors like energy, buildings and transportation,” comments Evan Juska, Head of US Policy, The Climate Group.

“The report also highlights the great potential for sub-national climate action to scale. International networks like The Climate Group’s States & Regions are supporting this by helping governments learn from their global peers. While new initiatives like the Compact of States & Regions and the Compact of Mayors provide a platform for more states, regions and cities to set ambitious goals, track progress, and attract the investment needed to make low carbon development a reality.”

MOMENTUM FOR CHANGE

This year, for the first time in 40 years, greenhouse gas emissions decoupled from economic growth. Such a milestone shows that a better, sustainable future is possible.

However, this is not enough if we want to stay below the globally recognized limit of 2 Celsius degrees, states the new report. To date, carbon emitted per dollar of GDP in the global economy is declining less than 1.5% a year – but between now and 2050, the rate must be nearly 5%.

To address this issue, the New Climate Economy report indicates 10 key areas that could achieve 59-96% of the emissions reductions needed by 2030 to achieve the 2 degree threshold target.

Cities is the first area examined by the report because of their environmental impact. According to the UN, 60% of the world’s population will live in cities by 2030. Authors call for “compact, connected and efficient cities” able to protect air quality and spur economic growth – and ultimately, protect jobs.

To achieve this, an ‘integrated package’ of at least US$1 billion to support the biggest cities is recommended. These investments can generate savings in the period to 2050 of US$16.6 trillion, reducing greenhouse gas emissions by 3.7 gigatons (Gt) by 2030.

Such ambitious goals are in line with actions from some of the world’s most forward-thinking sub-national governments, which our States & Regions Director Libby Ferguson calls the ‘unsung heroes’ of the climate fight.

The first round of climate targets submitted to our pioneering States and Regions Compact saw 20 governments, representing over 220 million people, US$8.3 trillion GDP, and 1.81 Gt CO2 equivalent – or 5% of all global emissions.

Along with restoring and protecting agricultural and forest landscape, another key area is investing in clean technology. The report indicates that at least US$1 trillion of investment per year is necessary to spur the clean revolution, in particular focusing on power supply and energy efficiency.

Such measures are even more important in a world where 1.3 billion people lack access to electricity, states the report. To address this pressing issue, The Climate Group has set up the program Bijli – Clean energy for all, aimed at providing clean and cheap renewable and solar-powered energy in rural India.

“Technological innovation, new economic trends, and new political commitments are now combining to build momentum for change,” say the authors of the reports, calling the major economies to at least triple their research and development sector by mid-2020s. Just financing a scale-up of clean energy as suggested could reduce annual GHG emissions in 2030 by 5.5-7.5 Gt Co2 equivalent.

Energy efficiency is an area where the potential benefits are immense, but it must be supported by adequate policies. According to the report, enhancing this area could boost cumulative economic output by US$18 trillion to 2035, while reducing GHG emissions in 2030 by 4.5-6.9 GtCo2 equivalent.

Putting a price on carbon – to account for its indirect damages, while using that revenue to incentivize clean technology – is becoming more and more popular around the world. Also called ‘cap and trade’, the system aims to ‘cap’ the CO2 emissions in the area covered, allowing businesses to ‘trade’ the allowances of how much carbon they can put in the atmosphere.

While in Europe the mechanism is being revised because of the low price of such allowances, the case of California and Quebec shows how such a policy can be effective in both reducing emissions and strengthening their low carbon economies.

So far, about 12% of all the GHG emissions in the world are covered – or will be soon – by this system, and over 150 companies now use an internal carbon pricing to assess their investment.

The report also calls to capitalize theUS$90 trillion in infrastructure needed globally by 2030. Integrating climate objectives in these projects will have “no or very modest additional cost” in the short period, while saving much more in the long run.

BUSINESS ROLE

Businesses must also play their role, adopting climate plans such as going 100% renewable. The Climate Group is helping companies that want to achieve this with the RE100 program, which shows how it is possible to provide energy security, help manage fluctuating energy costs, improve reputation and deliver carbon emission reduction goals.

The report estimates businesses are part of a US$5.5 trillion global market in low carbon and environmental technologies and products. Policymakers must take bold steps to drive this market by creating new jobs and skills.

The authors also warn ambition must be raised in reducing international aviation and maritime emissions – which account for about 5% of global CO2 emissions to date and will reach 10-32% by 2050.

The last recommendation in the report is to phase down hydrofluorocarbons, the fastest-growing GHGs in much of the world, with an increase rate of 10-15% per year. Such gases, usually used in refrigerants, must be incorporated into the Montreal Protocol, the international treaty to reduce the production and consumption of ozone depleting substances.

This year can – and must – be the tipping point for climate action, thanks to the momentum building around the Conference of the Parties in Paris later this year. “Achieving a new international climate agreement in Paris would provide a vital foundation for building a lower-carbon and more resilient global economy,” conclude the authors of the report, “sending a strong signal to businesses and investors.”